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Future HMRC phone system will be ‘radically different’, says tech chief
EXCLUSIVE: HMRC digital chief says multimillion investment in telephony overhaul will replace ‘ancient integrations from up to 50 systems’, stressing AI features will not ‘remove any people’.
In an exclusive interview with Business & Accountancy Daily at the annual HMRC stakeholder conference, Daljit Rehal, HMRC’s chief digital and information officer, talked frankly about the ambitious, multimillion project to overhaul the creaking legacy telephony system, the transformational AI features and staff concerns about the risks to jobs.
Rehal joined HMRC in 2020 following a private-sector career spanning telecommunications, utilities, and consulting, having previously held senior roles including global digital and data services director at Centrica, solutions implementation director at TalkTalk, director of customer retention at Virgin Media and executive management consultant at KPMG.
Drawing on his experience in both the private and public sectors, Rehal argued that the pressures facing HMRC are not dissimilar to those faced by large businesses.
‘In the private sector you have the pressure from the board, from the chief executive, from customers, regulatory bodies, but also your shareholders’, he said.
‘By direct translation you have those equivalents here. You have your board; your minister, and your shareholders are the public.’
Rehal added that taxpayers can hold HMRC to account in much the same way investors can challenge a company.
‘They will write to their MPs, who will summon us in a way that in the private sector the shareholders would do.’
Rehal's experience across both sectors has also shaped how he approaches HMRC's own digital transformation programme. And top of the agenda was progress on the £500m Contact Centre as a Service (CCaaS) system, the centrepiece of the tax authority's telephony and customer relationship management (CRM) overhaul.
The project will be managed by outsourcing giant Capgemini and will replace HMRC’s legacy, problematic telephone infrastructure with an AI enabled, cloud-based CCaaS platform.
The investment will result in a ‘radically different’ experience for accountants and individual taxpayers, Rehal said. The telephony project entails a major system overhaul and will be rolled out gradually. In June, HMRC indicated an initial project completion date during 2028-29.
Rehal said: ‘We are now in the process of prioritising delivery based on the best incremental value that we can bring. Instead of doing everything and then going live, we are exploring which bits we can go forward with.’
The important issue for taxpayers is whether the quality of HMRC telephone lines improves and waiting times are reduced. For HMRC it is integral to the transformation of the telephony and CRM tech stack and digitalisation of the tax authority.
The new AI enabled system will streamline the call process by identifying the information required to answer queries from callers and retrieving this automatically for HMRC staff.
Rehal explained: ‘Our systems at the moment rely on ancient integrations from up to 50 systems. For a simple query, we could end up having to fetch all this data and bring it back, and for our agents in call centres this is a very difficult experience.
‘All of that will become a lot easier, because the coordination of what to bring back to help the conversation will be driven through the AI agents recognising and fetching.’
The new CCaaS platform will replace the current menu-based phone system with more than a dozen options, and instead it will ‘interpret’ callers’ queries based on what they say at the start of the call.
Rehal said: ‘They will experience a difference from today where you pick up the phone and it says, “press one for this service”, “press two for that service”, that kind of interactive voice response stuff will disappear.’
Essentially the new system will begin by asking callers what they need, then interpret their queries and respond to what they say, rather than asking them to choose from a predetermined list.
He described the new system as ‘more of a listening service, a service that is built around us understanding their [taxpayer] needs and then hooking them up with the best person that can answer their query’.
Longer term, Rehal said the CCaaS platform would be able to suggest relevant guidance and prompts to HMRC advisers based on previous interactions, helping ensure callers receive more consistent support. This is because the telephony and CRM system will be integrated rather than held in multiple disparate parts of HMRC’s IT infrastructure.
AI will not replace HMRC staff
Artificial intelligence (AI) tools are embedded in the new CCaaS system and will be central to improving productivity and service levels for taxpayers.
The AI angle brings challenges due to the complexity of the tax system and the risks with getting decisions wrong.
Rehal stressed: ‘One of our red lines is, every decision that we use AI for has to be explainable, it has to be proven there is no bias, we have to ensure we are protecting against hallucination.’
‘AI models rely on probability-based searches which attempt to determine what a user is most likely asking.
‘When it comes to operationalising tax, it cannot be “this is probably what we thought you meant”, because the answer has to be repeatable, it has to be the same every time.’
When asked whether complete automation was HMRC’s objective, Rehal said: ‘Even if we could automate everything through AI, as a public service we always have to have a response for the digitally excluded.’
Addressing staff concerns about the impact of AI on jobs, Rehal was open in his response.
‘There is some. I think we are fairly normal in regard to that. There probably isn’t any organisation that employs people where that isn’t a worry,’ Rehal said.
‘But we are approaching it in a very different way. For our adoption of AI, it is one of our principles that we are not doing this to remove any people. We are doing this to make people productive.’
Report by Jacob Grattage
Further reading
HMRC systems are a ‘lumbering dinosaur’ | 2 May 2025
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